ASSESSMENT AND RECOMMENDATIONS
OECD ECONOMIC SURVEYS: ESTONIA © OECD 2017
18
40 of gross exports and 60 in value added terms, with maritime transport and tourism being the largest items. The main exporting destinations are Sweden and Finland, with the
EU being the destination for 70 of exports. Export diversification has mitigated the impact of weak economic developments in Estonia’s main trading partners, notably Finland and
Russia. Nevertheless, some sectors, including food processing and tourism, have been hit by Russia’s economic downturn and its ban on imports of EU food products. The profitability of
the domestic oil shale industry, which accounts for around 1 of GDP, has also been affected by the decline in oil prices over recent years.
Private consumption has been the main growth engine over the past two years, supported by strong labour market performance, record low inflation and interest rates see
Figure 4, Panel B. Unemployment has declined by around 10 percentage points since 2010 Figure 5. Since mid-2015, this trend has come to a halt partly due to the reform of the
disability benefit pension scheme the Work Ability reform, which now conditions the receipt of benefits to job-search activity. Recipients of the disability pension with work
capacity have to register as unemployed and thereby have access to a range of activation and Figure 4. Economic indicators
1. Export performance is measured as actual growth in exports relative to the growth of the country’s export market. Source: OECD Economic Outlook 101 Database
updated with information available on 1 September 2017. 1 2
http:dx.doi.org10.1787888933581049
2005 2007
2009 2011
2013 2015
2017 - 4
4 8
12 16
B. Consumer price inflation
Year-on-year, change
Estonia OECD
90 95
100 105
110 115
120 125
130
2005 2007
2009 2011
2013 2015
2017
A. Real GDP
2005 = 100
Estonia OECD
80 90
100 110
120 130
140
2005 2007
2009 2011
2013 2015
2017
C. Export performance
1
2005 = 100
Estonia OECD
2005 2007
2009 2011
2013 2015
2017 50
70 90
110 130
150 170
D. Investment, real
2005 = 100
Estonia OECD
ASSESSMENT AND RECOMMENDATIONS
OECD ECONOMIC SURVEYS: ESTONIA © OECD 2017
19
rehabilitation measures aiming at improving their employability. Because some of them did not find a job, the unemployment rate has increased. Nevertheless, participation and
employment rates stand above OECD average, and labour shortages have emerged in some sectors e.g. ICT, and health care.
Wages have increased fast Figure 6, Panel A. While strong wage growth is to be expected in a catch-up economy, it seems out of line with its peers and disconnected from flattening
productivity growth IMF, 2017 and Figure 6. Public-sector wage increases and rises in the minimum wage have played a significant part IMF, 2017. Also, emigration of skilled labour
puts upwards pressure on wages, though Estonia has been less affected by brain drain than its Baltic peers, and the net emigration trend has reversed in recent years IMF, 2016. The rise in
Figure 5. Labour market conditions have tightened
Source: OECD Economic Outlook 101 Database updated with information available on 18 July 2017.
1 2 http:dx.doi.org10.1787888933581068
3 5
7 9
11 13
15 17
19 21
2005 2007
2009 2011
2013 2015
2017
A. Unemployment rate
of labour force
Estonia OECD
2005 2007
2009 2011
2013 2015
2017 90
95 100
105 110
115
B. Working age population
Aged 15-74, index 2005 =100
Estonia OECD
Figure 6. Unit labour costs have increased fast
1. Deflated by the consumer price index. 2. An increase in the index indicates a real appreciation and a corresponding deterioration of the competitive position.
3. Simple average of Czech Republic, Hungary, Latvia, Lithuania, Poland, Slovak Republic, and Slovenia. Source: OECD Economic Outlook 101 Database
updated with information available on 1 September 2017. 1 2
http:dx.doi.org10.1787888933581448
90 100
110 120
130 140
150 160
2005 2007
2009 2011
2013 2015
2017 2005 = 100
A. Real wage rate¹
Estonia OECD
CEE average³
80 100
120 140
160
2005 2007
2009 2011
2013 2015
2017 2005 = 100
B. Competitiveness indicator²
Based on relative unit labour costs
Estonia EA16
CEE average³
